US President Barack Obama spoke out against tax
inversions one day after the Treasury Department announced
tighter rules.

Speaking at the White House on Tuesday, Obama said tax
inversions hurt ordinary Americans who do not have the
financial muscle to take advantage of loopholes in the tax
system.

In tax inversion, US-based companies may acquire others in
countries that have a more favorable tax code, and change the
corporate headquarters to be based in those countries. Without
any dealmaking, they could also set up shop in those countries to
benefit from more relaxed tax laws.

"Rather than doubling down on polices that let a few big
corporations or the wealthiest among us play by their own rules,
we should keep building an economy where everybody has a fair
shot, and everybody plays by the same rules," Obama said.

Inversion "makes hardworking
Americans feel like the deck is stacked against them," he
said.

"The Treasury Department hauled out a nuclear weapon yesterday,
killing the "earnings strippings" provisions that allow firms to
juggle revenues between U.S. and offshore divisions in entities
that have completed "inversion" deals," wrote Greg Valliere,
chief global strategist at Horizon Investments, in a note
Tuesday.

The Treasury Department's rules announced Monday would put
tighter restrictions on inversion transactions if companies
have done them within the last 36 months. The rules would
also recalculate the anti-inversion penalties that US companies
incur for mergers with foreign companies, where American
shareholders would own at least 60% of the combined
company.

Shares of drugmaker Allergan collapsed in
after-hours trading on Monday, and were the weakest on the
S&P 500 in Tuesday trading, down 16%. The company's
pending $160
billion deal with Ireland-based Pfizer announced late last
year would take advantage of the country's 12.5% tax rate, which
is much lower than America's.

Obama said the leaked
Panama Papers, which allege several instances of tax evasion
among the world's most powerful people, were a reminder that tax
avoidance is a "big global problem."

"The best way to end irresponsible behavior is by tax reform:
simplifying the tax code for everyone," Obama said. He said
despite his proposals, Congress has not yet taken meaningful
action.